What is a Payment Bond?
A Payment Bond guarantees that subs, suppliers and other lower tier contracted workers will be paid according to contract terms should the prime contractor go bankrupt while working on the project.KOG understands the differences between a Payment Bond and Performance Bond. With our long-term focus on construction bonds, our staff can answer your questions to ensure you understand your obligations under each type of bond.
Payment Bonds are required in conjunction with the Performance Bond. Construction Payment Bonds are typically in the amount of 100% of the contract price. They guarantee that all direct job-related bills will be paid. If the contractor cannot meet this obligation, the surety will require to pay these bills under the Payment Bond.
Payment bonds are usually obtained by contractors or subcontractors prior to the commencement of a construction project.
Once a claim is initiated, the surety investigates, in order to decide whether any action must be taken. If the claim is legitimate, obligees can expect to be compensated for their losses up to the full amount of the payment surety bond.
SCHEDULE A PHONE CALL TO DISCUSS YOUR BOND REQUIREMENTS
OR CALL US TODAY AT (610) 399-4080